Existing therapies for inflammatory bowel disease that are based on broad suppression of inflammation result in variable clinical benefit and unwanted side effects. A potential therapeutic approach for promoting immune tolerance is the in vivo induction of regulatory T cells (Tregs). Here we report that activation of the aryl hydrocarbon receptor using the non-toxic agonist 2-(1′H-indole-3′-carbonyl)-thiazole-4-carboxylic acid methyl ester (ITE) induces human Tregs in vitro that suppress effector T cells through a mechanism mediated by CD39 and Granzyme B. We then developed a humanized murine system whereby human CD4+ T cells drive colitis upon exposure to 2,4,6-trinitrobenzenesulfonic acid and assessed ITE as a potential therapeutic. ITE administration ameliorated colitis in humanized mice with increased CD39, Granzyme B, and IL10-secreting human Tregs. These results develop an experimental model to investigate human CD4+ T responses in vivo and identify the non-toxic AHR agonist ITE as a potential therapy for promoting immune tolerance in the intestine.